malware infections on eda systems overstated and disruption of it

ECONOMIC DEVELOPMENT ADMINISTRATION

Malware Infections on EDArsquos Systems Were Overstated and the Disruption of IT Operations Was Unwarranted

FINAL REPORT NO OIG-13-027-A

JUNE 26 2013

US Department of Commerce Office of Inspector General Office of Audit and Evaluation

FOR PUBLIC RELEASE

UNITED STATES DEPARTMENT OF COMMERCE Office of Inspector General Washington DC 20230

June 26 20 13

MEMORANDUM FOR Matthew Erskine Deputy Assistant Secretary of Commerce

for Economic Development Economic Development Administration

Simon Szykman

Chief Information~ r~

FROM Allen Crawley G A Assistant Inspector General for Systems Acquisition

and IT Security

SUBJECT Malware Infections on EDAs Systems Were Overstated and the Disruption of IT Operations Was Unwarranted

Final Report No OIG-13-027-A

Attached is the final report of our audit of EDAs information security program and cyber incident response In accordance with the Federal Information Security Management Act we evaluated EDAs incident response and recovery activities in relation to EDAs fiscal year 20 12 cyber incident We (I) assessed the effectiveness of EDAs IT security program (2) determined the significant factors that contributed to its incident and (3) evaluated both completed and planned activities to recover its information systems to support critical operational requirements

We found (I) EDA based its critical incident response decisions on inaccurate information (2) deficiencies in the Departments incident response program impeded EDAs incid~nt response and (3) misdirected planning efforts hindered EDAs IT system recovery

In response to the draft audit report EDA and the CIO concurred w ith all of our recommendations We summarized the responses in the report and included the full response in the appendixes We will post this report on the OIG website pursuant to section 8L of the Inspector General Act of 1978 as amended

Under Department Administrative Order 213-5 you have 60 calendar days from the date of this memorandum to submit an audit action plan to us The plan should outline actions you propose to take to address each recommendation

We appreciate the cooperation and courtesies extended to us by your staff during our audit Please direct any inquiries regarding this report to me at (202) 482-1855 and refer to the report title in all correspondence

Attachment

cc Thomas Guevara Deputy Assistant Secretary for Regional Affairs EDA Rod Turk Director O ffice of Cyber Security and Chief Information Security Officer Chuck Benjamin Chief Information Officer EDA Deborah Neff Audit liaison EDA Cara Huang Audit Liaison Office of the Chief Information Officer

Report In Brief JUN E 26 2013

Background

The Economic Development Admin-istrationrsquos (EDArsquos) mission is to lead the federal economic development agenda by promoting innovation and competitiveness thus preparing Ameri-can regions for growth and success in the worldwide economy To fulfill its mission EDA uses six regional offices to provide services specific to each regionrsquos needs

In accordance with the Federal Infor-mation Security Management Act of 2002 (FISMA) we evaluated EDArsquos incident response and recovery activities in relation to EDArsquos fiscal year 2012 cyber incident

Why We Did This Review

On December 6 2011 the Department of Homeland Security (DHS) notified the Department of Commerce that it detect-ed a potential malware infection within the Departmentrsquos systems The Depart-ment determined the infected compo-nents resided within IT systems operat-ing on the Herbert C Hoover Building (HCHB) network and informed EDA and another agency of a potential infection in their IT systems

On January 24 2012mdashbelieving it had a widespread malware infectionmdashEDA requested the Department isolate its IT systems from the HCHB network This action resulted in the termination of EDArsquos operational capabilities for enter-prise e-mail and Web site access as well as regional office access to database applications and information residing on servers connect-ed to the HCHB network

Given the Departmentrsquos limited incident response capabilities and the perceived extent of the malware infection the Department and EDA decided to aug-ment the Departmentrsquos incident re-sponse team Additional incident re-sponse support was provided by DHS the Department of Energy the National Institute of Standards and Technology and the National Security Agency as well as a cybersecurity contractor In early February 2012 EDA entered into an agreement with the Census Bureau to provide an interim e-mail capability In-ternet access to EDA staff and Census Bureau surplus laptops for EDA staff



OIG-13-027-A

WHAT WE FOUND

Reviewing EDArsquos IT security program and the events surrounding its December 2011 cyber incident and recovery efforts we found that

EDA Based Its Critical Cyber-Incident Response Decisions on Inaccurate Information Believing (a) the incident resulted in a widespread malware infection possibly propagating within its systems and (b) its widespread malware infection could spread to other bureaus if its IT systems remained connected to the network EDA decided to isolate its IT systems from the HCHB network and destroy IT components to ensure that a potential infection could not persist However OIG found neither evidence of a widespread malware infection nor support for EDArsquos decision to isolate its IT systems from the HCHB network

Deficiencies in the Departmentrsquos Incident Response Program Impeded EDArsquos Incident Response These deficiencies significantly contributed to EDArsquos inaccurate belief that it experienced a widespread malware infection Consequently the Department of Commerce Computer Incident Response Team (DOC CIRT) and EDA propagated inaccurate information that went unidentified for months after EDArsquos incident We found that DOC CIRTrsquos incident handlers did not follow the Departmentrsquos incident response procedures that its handler for EDArsquos incident did not have the requisite experience or qualifications and that DOC CIRT did not adequately coordinate incident response activities

Misdirected Efforts Hindered EDArsquos IT System Recovery With its incorrect interpretation of recovery recommendations EDA focused its recovery efforts on replacing its IT infrastructure and redesigning its business applications EDA should have concentrated its resources on quickly and fully recovering its IT systems (eg critical business applications) to ensure its operational capabilities Our review of EDArsquos recovery activities found that (a) EDA decided to replace its entire IT infrastructure based on its incorrect interpretation of recovery recommendations and (b) EDArsquos recovery efforts were unnecessary

The Department using already existing shared IT services returned EDArsquos systems to their former operational capabilities (except for access to another Departmental agencyrsquos financial system) in just over 5 weeks of starting its effort

WHAT WE RECOMMEND

We recommend that the Deputy Assistant Secretary for EDA

1 Identify EDArsquos areas of IT responsibility and ensure the implementation of required security measures

2 Determine whether EDA can reduce its IT budget and staff expenditures through the increased efficiencies of EDArsquos involvement in the Departmentrsquos shared services

3 Ensure that EDA does not destroy additional IT inventory that was taken out of service as a result of this cyber incident

We recommend that the Departmentrsquos Chief Information Officer

1 Ensure DOC CIRT can appropriately and effectively respond to future cyber incidents

2 Ensure incident response procedures clearly define DOC CIRT as the incident response coordinator for the bureaus relying on DOC CIRTrsquos incident response services

3 Ensure that DOC CIRT management has proper oversight and involvement in cyber incidents to ensure that required incident response activities take place

US DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

Contents Introduction 1

Findings and Recommendations 3

I EDA Based Its Critical Cyber-Incident Response Decisions on Inaccurate Information 3

A Inaccurate Analysis and a Misunderstanding Caused EDArsquos Perception of a Widespread Malware Infection 4

B EDArsquos Belief That Its Malware Infection Was Spreading Heavily Influenced Its Decision to Isolate Its IT Systems 6

C EDArsquos Severely Deficient IT Security Program Gave Credibility to the Purported Widespread Malware Infection 7

D EDA Sought Validation of a Sophisticated Cyber Attack 9

E External Incident Responders Found No Evidence of a Widespread Malware Infection or Extremely Persistent Malware 9

Conclusion 10

II Deficiencies in the Departmentrsquos Incident Response Program Impeded EDArsquos Incident Response 11

A DOC CIRT Did Not Follow Incident Response Procedures 12

B DOC CIRTrsquos Inexperienced Staff Hindered EDArsquos Incident Response 13

C DOC CIRT Did Not Adequately Coordinate EDArsquos Incident Response Activities 13

Conclusion 14

III Misdirected Efforts Hindered EDArsquos IT System Recovery 14

A EDA Acted on Its Incorrect Interpretation of Recovery Recommendations 14

B EDArsquos Recovery Efforts Were Unnecessary 15

Conclusion 16

Recommendations 17

Summary of Agency and Departmental Responses and OIG Comments 18

Appendix A Objectives Scope and Methodology 19

Appendix B Detailed Timeline of EDArsquos Cyber Incident Response and Recovery 21

Appendix C Agency Response 24

Appendix D Departmental Response 28



FINAL REPORT NO OIG-13-027-A 1

Introduction The Economic Development Administrationrsquos (EDArsquos) mission is to lead the federal economic development agenda by promoting innovation and competitiveness thus preparing American regions for growth and success in the worldwide economy To fulfill its mission EDA uses six regional offices1 to provide services specific to each regionrsquos needs

On December 6 2011 the US Computer Emergency Response Team (US-CERT)mdasha part of the Department of Homeland Security (DHS)mdashnotified the Department of Commerce Computer Incident Response Team (DOC CIRT2) that it detected a potential malware infection3 within the Departmentrsquos systems DOC CIRT determined the infected components resided within IT systems operating on the Herbert C Hoover Building (HCHB) network Accordingly DOC CIRT informed EDA and the National Oceanic and Atmospheric Administration (NOAA) of a potential infection in their IT systems NOAArsquos Computer Incident Response Team analyzed the information provided by DOC CIRT and identified the infected component NOAA remediated the malware infection and placed the remediated component back into operation by January 12 2012

By contrast on January 24 2012mdashbelieving it had a widespread malware infectionmdashEDA requested the Department isolate its IT systems from the HCHB network This action resulted in the termination of EDArsquos operational capabilities for enterprise e-mail and Web site access and regional office access to database applications and information residing on servers connected to the HCHB network

Given DOC CIRTrsquos limited incident response capabilities and the perceived extent of the malware infection the Department and EDA decided to augment the DOC CIRTrsquos incident response team Additional incident response support was provided by US-CERT the Department of Energy (DOE) Computer Incident Response Team the National Institute of Standards and Technology (NIST) Security Implementation and Incident Response Team and the National Security Agency (NSA) In addition EDA retained the services of a cybersecurity contractor

In early February 2012 EDA entered into an agreement with the Census Bureau to provide an interim e-mail capability Internet access to EDA staff and Census Bureau surplus laptops for

1 Regional offices are located in Atlanta GA Austin TX Chicago IL Denver CO Philadelphia PA and Seattle WA 2 The DOC CIRT provides computer incident response support to most of the Departmentrsquos operating units that use the Herbert C Hoover Building networkmdashan Office of the Chief Information Officer-managed infrastructure that many of the bureaus like EDA connect to for Department services Internet connectivity and communication infrastructure support for internal system operation Incident response services include interfacing with and reporting incidents to and from the US-CERT performing malware analysis interfacing with the Departmentrsquos network and security operations centers to coordinate changes in network configuration or monitoring resulting from an incident and providing remediation guidance 3 Malware is software used by attackers to disrupt computer operation gather sensitive information or gain access to computer systems In EDArsquos incident the notification indicated the presence of fake antivirus (FakeAV) software which deceives a user into executing an application masquerading as antivirus or a malware removal tool


EDA staff See appendix B for a detailed timeline of events for EDArsquos cyber-incident response and recovery

In accordance with FISMA4 we evaluated EDArsquos incident response and recovery activities in relation to EDArsquos fiscal year (FY) 2012 cyber incident We (1) assessed the effectiveness of EDArsquos IT security program (2) determined the significant factors that contributed to the incident and (3) evaluated both completed and planned activities to recover its information systems to support critical operational requirements See appendix A for details regarding our objectives scope and methodology

4The Federal Information Security Management Act of 2002 (FISMA) 44 USC sect 3541 (2002) et seq requires agencies to secure systems through the use of cost-effective management operational and technical controls The statutersquos goal is to provide adequate security commensurate with the risk and extent of harm resulting from the loss misuse or unauthorized access to or modification of information collected or maintained by or on behalf of an agency In addition FISMA requires inspectors general to evaluate agenciesrsquo information security programs and practices by assessing a representative subset of agency systems and results are reported to the Office of Management and Budget the Department of Homeland Security and Congress annually



Findings and Recommendations As part of our annual FISMA work we reviewed EDArsquos IT security program and the events surrounding its December 2011 cyber incident and recovery efforts We found that (1) EDA made key incident response and recovery decisions with inaccurate information (2) DOC CIRTrsquos insufficient incident response efforts degraded the quality of EDArsquos incident response and (3) EDArsquos misdirected efforts hindered the recovery of its IT systems

I EDA Based Its Critical Cyber-Incident Response Decisions on Inaccurate Information

EDA believed the incident resulted in a widespread malware infection that was possibly propagating within its systems Furthermore EDA believed that its widespread malware infection could spread to other bureaus if its IT systems remained connected to the network so EDA decided to isolate its IT systems from the HCHB network

OIG found no evidence to support EDArsquos beliefs Specifically we found no evidence of a widespread malware infection Further we found no evidence to support EDArsquos decision to isolate its IT systems from the HCHB network

The perception of a widespread malware infection and EDArsquos incident response decisions are attributable to several factors

DOC CIRTrsquos inaccurate analysis and a misunderstanding caused EDArsquos perception of a widespread malware infection

EDA believed that the malware infection would spread to other bureaus on the HCHB network

Serious long-standing deficiencies in EDArsquos IT security program gave credence to EDArsquos belief that it experienced a widespread malware infection

EDArsquos belief in its widespread malware infection led it to seek validation of a sophisticated cyber attack5

EDA based its recovery decisions on its belief that it faced a widespread malware infection that included extremely persistent malware6

5 A sophisticated cyber attack typically involves the use of attack techniques such as exploiting previously unknown vulnerabilities to successfully compromise a component 6 Extremely persistent malware cannot be eradicated by reimaging the infected systemrsquos hard drive (eg malware that infects a devicersquos firmware in order for the infection to persist)



A Inaccurate Analysis and a Misunderstanding Caused EDArsquos Perception of a Widespread Malware Infection

EDA believed that a cyber attack resulted in an extensive malware infection affecting over half of its components7 This belief originated on the first day of incident response activities when DOC CIRT sent EDA inaccurate information concerning the extent of the malware infection which overstated the number of components involved Additionally EDA misunderstood DOC CIRTrsquos follow-up communications which accurately described the limited extent of the infection Even though additional communications occurred between DOC CIRT and EDA each organization continued to have a different understanding of the extent of the malware infection

DOC CIRTrsquos first incident notification was misleading On December 6 2011 US-CERT alerted DOC CIRT to suspicious activity which involved EDArsquos systems on the HCHB network In an effort to identify infected components DOC CIRTrsquos incident handler requested network logging information However the incident handler unknowingly requested the wrong network logging information (see finding II subfinding B for more information on the incident handler) Consequently on December 7 2011 DOC CIRT sent an e-mail incident notification to EDA (in response to US-CERTrsquos alert) that inaccurately described the extent of the potential malware infection Instead of providing EDA a list of potentially infected components the incident handler mistakenly provided EDA a list of 146 components8 within its network boundary Accordingly EDA believed it faced a substantial malware infection

DOC CIRTrsquos mistake resulted in a second incident notification Early on December 8 2011 an HCHB network staff member informed DOC CIRT that the incident handlerrsquos request for network logging information did not identify the infected components Rather the response merely identified EDA components residing on a portion of the HCHB network (ie the listing of 146 components initially provided to EDA) The HCHB network staff member then performed the appropriate analysis identifying only two components exhibiting the malicious behavior in US-CERTrsquos alert With this new information DOC CIRT sent EDA a second e-mail incident notification

DOC CIRTrsquos second incident notification was vague DOC CIRTrsquos second incident notification did not clearly explain that the first incident notification was inaccurate As a result EDA continued to believe a widespread malware infection was affecting its systems Specifically the second incident notification

Began by stating the information previously provided about the incident was correct EDA interpreted the statement as confirmation of the first incident

7 EDArsquos IT system was comprised of approximately 250 IT components (eg desktops laptops and servers) 8 The first incident notification contained an attachment with 146 distinct potentially infected components DOC CIRT EDA and external incident responders reported numbers ranging from 142 to 148 components but the accurate count from the incident notification is 146 components



notification when DOC CIRTrsquos incident handler simply meant to confirm EDA was the agency identified in US-CERTrsquos alert Nowhere in the notification or attachment does the DOC CIRT incident handler identify that there was a mistake or change to the previously provided information

Contained an attachment name that further obscured any clarification Although the incident notificationrsquos attachment correctly identified only 2 components exhibiting suspicious behaviormdashnot the 146 components that DOC CIRT initially identifiedmdashthe name of the second incident notificationrsquos attachment exactly matched the first incident notificationrsquos attachment obscuring the clarification

DOC CIRT and EDArsquos misunderstanding continued Over the next 5 weeks additional communications occurred between DOC CIRT and EDA However each organization continued to have a different understanding of the extent of the malware infection DOC CIRT believed the incident affected only two components whereas EDA believed the incident affected more than half of its components Several factors contributed to these different interpretations

DOC CIRT assumed EDA understood that its second incident notification superseded the first incident notification and that there were only 2 potentially infected componentsmdashnot 146 However DOC CIRT did not follow up to establish whether EDA understood the new information

EDA responded to the second incident notification by providing a sample of two components (on the list identified in the first incident notification and that were exhibiting malicious behavior) for forensic analysis DOC CIRT believed the sample to be the same two components identified in the second incident notification

When DOC CIRT confirmed that the sample of 2 components was infected with malware EDA believed that DOC CIRT had confirmed the malware infection for all 146 components listed in the first incident notification

DOC CIRT did not retain the first incident notification showing 146 components or document initial incident response activities Therefore when DOC CIRT management became involved in the incident response activities they could not see that a misunderstanding had occurred

When DOC CIRT asked EDA to carry out typical containment measures (reimaging9

the infected components) EDA informed DOC CIRT there were too many components involved making typical containment measures unfeasible DOC CIRT assumed EDA performed an independent analysis to identify additional infected components (even though EDA lacked the necessary capabilities) and assumed EDA was now dealing with a widespread malware infection Likewise EDA assumed DOC CIRT was aware of the incidentrsquos magnitude given that DOC CIRT provided the list of

9 Reimaging is the process of reinstalling the operating system and applications on a hard drive as well as restoring the necessary information from known good backups



infected components in its first incident notification Now EDA and DOC CIRT were operating with the samemdashalbeit inaccuratemdashbelief

Unfortunately both organizations continued to propagate the inaccurate information (the basis for the widespread malware infection) during the incident response activities DOC CIRTrsquos representation of the extent of the malware infection was accepted by DHS and not independently validated in its draft report DHSrsquos draft report stated ldquoover 143 systems infected with common fake anti-virusrdquo and ldquo50 percent of EDArsquos network is infectedrdquo10 which portrayed a widespread malware infection The NSA report stated that ldquothe EDA network was extremely inundated with malwarerdquo and ldquothe extent of the compromise and the state of the overly infected network will make it very difficult to deconflict the vast amount of indicatorsrdquo11 NSA did not independently verify incident information but it presented similar information to that presented by DHS as fact As a result EDA believed these incident reports12 supported its conclusion regarding the extent of the malware infection

The misunderstanding went undetected by EDA until December 18 2012mdashand by the Department until December 19 2012mdashwhen OIG completed its validation of events and informed both organizations of its initial conclusions

B EDArsquos Belief That Its Malware Infection Was Spreading Heavily Influenced Its Decision to Isolate Its IT Systems

On January 24 2012 EDA at the recommendation of EDArsquos current chief information officer (CIO) decided to isolate EDArsquos IT systems from the HCHB network EDArsquos CIO believed that (1) EDA experienced a widespread malware infection (2) the malware infection was spreading within EDArsquos IT systems and (3) the malware infection could spread to other bureaus residing on the HCHB network Specifically EDArsquos CIO believed that an antivirus scan of EDArsquos primary e-mail server indicated multiple malware infections and the malware infection could propagate to other bureaus on the HCHB network However we found no evidence to support these beliefs Specifically

There was no widespread malware infection EDA based its conclusion on inaccurate information (see finding 1 subfinding A)

There was no indication of an infection in the e-mail server Our analysis of the e-mail serverrsquos antivirus logs showed that the antivirus software was up-to-date (eg with

10 US Department of Homeland Security National Cyber Security Division February 7 2012 Strategic Remediation Strategy for Department of CommerceEconomic Development Administration Draft Version 10 Washington DC DHS National Cyber Security Division 1 DHS did not issue a final version of its report 11 National Security Agency Computer Network Operations Countermeasures Division Information Assurance Directorate May 15 2012 IAD Intrusion Response of Department of Commerce Economic Development Administration I3331-004R-2012 Ft Meade MD NSA 4 12 NIST did not issue an incident response report DOErsquos incident report addressed the results of an assessment on one componentmdashanalysis indicated trace evidence of an attempted infection but no extremely persistent malwaremdashnot the incident as a whole



the most current software version and latest malware definitions) was scanning weekly and had not identified any malware Not only was EDArsquos CIO unable to substantiate his assertion with credible evidence EDArsquos IT staff did not support the assertion of an infection in the e-mail server

The e-mail server did not pose an increased risk EDArsquos outbound e-mail traffic does not pass through any other e-mail systems before reaching the Internet therefore the infection would not have spread the way EDArsquos CIO believed Further e-mail traffic in general does not pose a risk to an e-mail server as infected e-mail attachments typically require user interaction Additionally the Department has security measures to address infected e-mail attachments Thus EDArsquos e-mail server did not pose an increased risk even if it had been infected

C EDArsquos Severely Deficient IT Security Program Gave Credibility to the Purported Widespread Malware Infection

Since 2006 OIG has identified significant deficiencies in EDArsquos IT security program NSArsquos 2009 review13 further emphasized these deficiencies with the discovery of multiple common malware14 infections We reviewed EDArsquos IT security program after its incident and found that many of the deficiencies identified in past reviews remained unremediated for more than 4 years (see table 1 below for examples of deficient security measures)

13 In 2009 NSA reviewed security measure implementations on IT systems operating on the HCHB network 14 Common malware (eg spyware virus or Trojans) although typically malicious and potentially harmful can be removed using common cleaning tools and processes (eg reimaging)



Table 1 Examples of EDArsquos Long-Standing Security Deficiencies

Security Measure

Definition Significance

Deficiencies Identified In

OIG and NSA

Reviewsa

Secure Configurations

The processes an organization uses to define how to secure its IT products (eg operating systems databases and web applications)mdash limiting the functions of a component to minimal operations

Without effective secure configurations an organization will not effectively limit unauthorized use of its components Securely configuring IT products is a fundamental and critical security measure (one of DHSrsquos and NSArsquos key recovery recommendations to EDA)

2006 2009 2010 2012 EDA had not defined or implemented this security measure

Patch Management

The processes an organization uses to track and correct software (eg operating system and application) vulnerabilities

Without effective patch management vulnerabilities can remain unremediated leaving components vulnerable to compromise and information less secure

2009 2010 2012 EDA did not reliably trackb or correct vulnerabilities (some for many years)

Auditing and Monitoring

The processes and tools used to detect the use of systems and information by an unauthorized user or external attackers

Without effective auditing and monitoring an organization may not be able to track unauthorized access to components and information follow an attackerrsquos activities or reconstruct what happened when an incident occurs

2006 2012 EDA did not monitor for suspicious activity in its systems

Security Assessments

Assessments performed to determine the extent of security mechanism implementation

Without the appropriate assessment of security mechanisms organizations will not have an accurate picture of the risks to the system and management will not have the

2006 2010 2012 EDArsquos assessment methodologies did not appropriately identify

information necessary to make appropriate risk-based decisions

deficiencies or convey risks to operations and information

Source OIG FISMA reviews from 2006 2010 and 2012 and NSArsquos 2009 review a Not all security mechanisms were assessed in the course of each OIG FISMA review or in NSArsquos 2009 review b Prior to May 2011 EDArsquos systems had not been scanned for almost a year When scans resumed they identified over 35000 potential vulnerabilities Scans performed in December 2011 just prior to the incident indicated that EDA was struggling to remediate these vulnerabilities OIGrsquos post-incident review found 37 percent (56 of 151) of the vulnerabilities highlighted by the NSA in 2009 still existmdashthe NSA asserted in its incident response report that EDA did not address remediation recommendations from the NSArsquos 2009 assessment of EDArsquos IT systems

EDArsquos current CIO joined the organization in April 2011 The CIO inherited an IT security program suffering from longstanding and significant security deficiencies For example the CIO briefed EDA leadership that (1) EDA IT staff lacked appropriate IT security skills (2) system configuration management and secure configurations were not implemented and (3) systems were not appropriately monitored



The Department and EDA15 knew of EDArsquos many IT security program deficiencies therefore they more readily believed there was a widespread malware infection Further when external incident responders analyzed the incident they too observed pervasive deficienciesmdashthe result of too few implemented IT security mechanisms Their observations further reinforced the credibility of a widespread malware infection Furthermore the pervasive deficiencies led the Office of the Chief Information Officer (OCIO) and EDA not to question the accuracy of the extent of the malware infection despite a lack of supporting evidence

D EDA Sought Validation of a Sophisticated Cyber Attack

EDA hired a cybersecurity contractormdashin addition to other external agencies already responding to the incidentmdashto perform an in-depth evaluation of the malware infection in its systems EDArsquos CIO and senior leadership were specifically concerned about nation-state actors16 and the presence of extremely persistent malware that would prohibit typical containment measures such as reimaging infected components for immediate use

On January 30 2012 EDArsquos cybersecurity contractor began looking for suspicious activity and malware infections Preliminary analysis found indications of extremely persistent malware and suspicious activity on EDArsquos components EDA immediately acted upon this preliminary information and began an investigation of its entire IT component inventory for potential infections

E External Incident Responders Found No Evidence of a Widespread Malware Infection or Extremely Persistent Malware

Within 2 weeks of beginning its incident response activities EDArsquos cybersecurity contractor found the initial indications of extremely persistent malware were false positivesmdashnot actual malware infections However EDArsquos CIO sought guaranteed assurance that the components were infection-free and no malware could persist External incident responders were unable to provide the assurance EDArsquos CIO sought because doing so involved proving that an infection could not exist rather than that one did not exist By April 16 2012 despite months of searching EDArsquos cybersecurity contractor was unable to find any extremely persistent malware or indications of a targeted attack on EDArsquos systems Further the NSA and US-CERT did not find nation-state activity or extremely persistent malware

On May 15 2012 EDArsquos management determined that the forensics investigation was unlikely to yield new evidence and instead focused on cleaning its data17 and other

15 The Departmentrsquos annual internal IT reviews have identified IT security deficiencies in EDArsquos IT security program 16 Nation-state actors are hackers acting on behalf of a nationrsquos government to engage in nefarious activity such as cyber war and theft of intellectual property 17 Cleaning involves using several antivirus products to scan data files for indications of an infection



recovery activities Ultimately incident responders identified only six components18 with malware infections These malware infections could have been remediated using typical containment measures (eg reimaging) which normally have a minimal operational impact Additionally EDArsquos cybersecurity contractorrsquos data cleaning efforts did not identify any additional components with a malware infection (the contractor did identify the existence of common malware contained in archived e-mail attachments and temporary Internet browser files19) Typically antivirus software prevents common malware from executing as a result the contractor did not consider the malware a threat to EDArsquos components

Given EDArsquos history of common malware infections (the NSA identified common malware on EDArsquos IT systems in its 2009 review) there was a high probability that external incident responders would find some malware infections when investigating EDArsquos incident In fact EDArsquos lack of implemented IT security and the significant number of easily exploitable vulnerabilities negated an attackerrsquos need to use costly attack techniques (sophisticated cyber attacks) to compromise EDArsquos systems EDArsquos deficient IT security posture made it likely that external incident responders would find common malware In the end nothing identified on EDArsquos components posed a significant risk to EDArsquos operations

However EDArsquos CIO concluded that the risk or potential risk of extremely persistent malware and nation-state activity (which did not exist) was great enough to necessitate the physical destruction of all of EDArsquos IT components20 EDArsquos management agreed with this risk assessment and EDA initially destroyed more than $170000 worth of its IT components21 including desktops printers TVs cameras computer mice and keyboards By August 1 2012 EDA had exhausted funds for this effort and therefore halted the destruction of its remaining IT components valued at over $3 million EDA intended to resume this activity once funds were available However the destruction of IT components was clearly unnecessary because only common malware was present on EDArsquos IT systems

Conclusion

Since EDA did not validate the information (eg number of infected components and potentially spreading malware infection) it used to make its key decisions it unnecessarily expended a large portion of its IT budget and many months investigating its incident and planning for the recovery of its IT systems Despite only finding common malware

18 External incident responders identified six infected components two with rootkits (software that enables a persistent infection) and four with common malwaremdashincluding the two components DOC CIRT identified 19 Web browsers store on the IT componentrsquos hard drive the information downloaded from each Web page visited to enhance browser performance Although the industry labels this information ldquotemporaryrdquo the information remains on the componentrsquos hard drive until manually deleted 20 Prior to the incident EDA purchased laptops intended as replacements for its current desktop and laptop environment Because these new laptops had not been operational EDA could incorporate them into its new IT systems 21 EDA tracks the acquisition value rather than the depreciated value of its components



infections EDArsquos management and CIO remained convinced that there could be extremely persistent malware somewhere in EDArsquos IT systems

To recover from its perceived widespread malware infection EDA took the following significant recovery steps

Employed a cybersecurity contractor to investigate the malware infection and ensure its important data was free of malware

Entered into an agreement with the Census Bureau to provide EDA with an interim minimalistic IT solution22

Physically destroyed IT components to ensure that a potential infection could not persist

Employed a contractor to assist in the development of a long-term recovery solution

EDA expended more than $27 millionmdashover half of EDArsquos FY 2012 IT budget (see table 2 below for expenditures and finding 3 for further discussion of recovery activities) in pursuit of these recovery activities EDArsquos persistent mistaken beliefs resulted in an excessive response and ultimately unnecessary expenditure of valuable resources

Table 2 Significant Recovery Activity Expenditures

Activity Expenditurea

Cybersecurity contractor investigation of malware infection and data cleaning

$823000

Temporary infrastructure pending long-term IT solution $1061000

Destruction of IT equipmentb $175000

Contractor assistance for a long-term recovery solution $688000

TOTAL EXPENDITURES $2747000

Source Contracts from EDArsquos recovery efforts a All values in the table are rounded b EDA paid $4300 to destroy $170500 in IT equipmentmdashthese are rounded values

II Deficiencies in the Departmentrsquos Incident Response Program Impeded EDArsquos Incident Response

Deficiencies in HCHBrsquos incident response program (DOC CIRT) significantly contributed to EDArsquos inaccurate belief that it experienced a widespread malware infection consequently DOC CIRT and EDA propagated inaccurate information that went unidentified for months after EDArsquos incident

We found the following deficiencies in DOC CIRTrsquos incident response activities

22 EDA did not intend for the Census Bureau to provide a final IT recovery solution Instead the Census Bureau provided an interim solution that met EDArsquos minimum operating requirements until EDA could develop a permanent solution



DOC CIRTrsquos incident handlers did not follow the Departmentrsquos incident response procedures

DOC CIRTrsquos incident handler for EDArsquos incident did not have the requisite experience or qualifications23

DOC CIRT did not adequately coordinate incident response activities

A DOC CIRT Did Not Follow Incident Response Procedures

When responding to EDArsquos incident DOC CIRT staff did not appropriately follow incident response procedures Specifically DOC CIRT staff did not (1) properly document the initial incident response activities (2) establish the extent of the malware infection and (3) perform a required containment procedure

DOC CIRT did not properly document the initial incident response activities We found DOC CIRT did not document its communications with EDA or record pertinent incident details like requests actions taken or analysis results For example the incident handler deleted the first incident notification showing 146 potentially infected components and retained only the second incident notification showing 2 potentially infected components Had the incident handler documented all information per the Departmentrsquos incident response procedures it would have been more likely that other DOC CIRT staff or external incident responders could have identified the misunderstanding regarding the extent of the malware infection As a result EDA the Department and external incident responders would not have needed to expend resources to resolve a widespread malware infection that did not exist

DOC CIRT did not accurately establish the extent of the malware infection We found that DOC CIRT staff did not appropriately establish the extent of the malware infection prior to proceeding with other incident response activities (eg conducting forensic analysis) The Departmentrsquos incident response procedures require that incident handlers establish the extent of an infection before proceeding with other incident response activities so that all involved in the incident response efforts can formulate realistic containment and mitigation strategies Since DOC CIRT did not accurately establish the extent of EDArsquos incident EDArsquos misunderstanding (eg EDA thought there were 146 infected components instead of only 2) influenced everyonersquos perception of the incident and contributed to EDArsquos unnecessary recovery and remediation activities

DOC CIRT did not appropriately perform a required containment procedure When HCHB network staff correctly determined that US-CERTrsquos alert involved two components DOC CIRTrsquos incident handler should have followed the Departmentrsquos required containment procedure Specifically the incident handler should have

23 The Space and Naval Warfare Systems Command (SPAWAR) a Department of the Navy organization provided the OCIO cybersecurity technical supportmdashincluding an incident handlermdashspecified in an interagency agreement that ended on February 8 2012



directed HCHB security operations center staff to block HCHB network activity associated with the malicious address identified in US-CERTrsquos alert Furthermore on December 15 2011 EDA reminded DOC CIRTrsquos incident handler to block the malicious address However DOC CIRT did not initiate this action until January 24 2012 the same day EDArsquos systems were isolated from the HCHB network

B DOC CIRTrsquos Inexperienced Staff Hindered EDArsquos Incident Response

DOC CIRTrsquos inexperienced staff and inadequate knowledge of EDArsquos incident response capabilities24 hindered its ability to provide adequate incident response services DOC CIRTrsquos incident handler managing EDArsquos initial incident response activities had minimal incident response experience no incident response training and did not have adequate skills to provide incident response services The lack of experience training and skills led the incident handler to request the wrong network logging information (ie perform the wrong incident analysis) which led EDA to believe it had a widespread malware infection and deviate from mandatory incident response procedures The Departmentrsquos Office of the Chief Information Officer should have ensured that all DOC CIRT staff met the Departmentrsquos minimum incident response qualifications

In addition DOC CIRT staff did not understand that there was a preexisting expectation of specific incident response services as outlined in the service level agreement (SLA) between the DOC CIRT and EDA This agreement clearly states DOC CIRTrsquos obligated incident response services (eg investigation forensics and reverse engineering) and defines EDArsquos incident response responsibilities (eg reporting incidents and dealing with quarantined or deleted malware) Since DOC CIRT staff did not understand this agreement they inaccurately assumed EDA was capable of performing its own incident analysis activities (eg determining the extent of the malware infection)

C DOC CIRT Did Not Adequately Coordinate EDArsquos Incident Response Activities

DOC CIRT is responsible for coordinating incident response efforts (eg dissemination of information and coordination of incident response activities) However DOC CIRT did not effectively coordinate EDArsquos incident response activities The inadequate coordination resulted in haphazard communications in which external incident responders received minimal direction As a result

External incident responders performed redundant forensics analysis on the same components External incident responders unnecessarily and wastefully expended resources to develop the same conclusions

The quality of EDArsquos incident response suffered DOC CIRT and EDA did not use external incident respondersrsquo technical knowledge and experience to their fullest potential

24 Each Departmental bureau has designated incident responders and its own set of internal incident response capabilities The skill level (as gauged by an incident responderrsquos training certifications and previous incident response experience) and the tools available within each bureau differ



Gaining a full understanding of EDArsquos incident was difficult Inadequate coordination resulted in undirected incident response efforts and uncoordinated distribution of pertinent incident information making it difficult to gain a holistic and unbiased view of the incident

Conclusion

OIG briefed the Departmentrsquos CIO on weaknesses within the DOC CIRT that we identified during our review of incident response activities Accordingly the Department has taken actions to correct DOC CIRTrsquos weaknesses Specifically the Department is taking steps to

Ensure staff receive appropriate training

Update incident response procedures

Review services offered (including the needs and capabilities of each bureau)

Develop agreements with external agencies to provide incident response expertise

Hire experienced incident handlers

III Misdirected Efforts Hindered EDArsquos IT System Recovery

Based on EDArsquos erroneous belief that it had a widespread malware infection and its incorrect interpretation of recovery recommendations EDA focused its recovery efforts on replacing its IT infrastructure and redesigning its business applications EDA should have concentrated its resources on quickly and fully recovering its IT systems (eg critical business applications) to ensure its operational capabilities

Our review of EDArsquos recovery activities found the following

EDA decided to replace its entire IT infrastructure based on its incorrect interpretation of recovery recommendations

EDArsquos recovery efforts were unnecessary

A EDA Acted on Its Incorrect Interpretation of Recovery Recommendations

EDA received similar recovery recommendations from NSA and DHS that focused on quickly recovering IT services (eg reimaging infected components) implementing security mechanisms and best practices and monitoring its recovered IT systems for suspicious activity These recovery recommendations conventional practices used to recover from a cyber incident were appropriate for EDArsquos recovery

EDArsquos continued belief in the necessity of permanent remediation actions (ie destroying its IT components) and a significant malware infection contributed to EDA incorrectly interpreting the recovery recommendations EDA erroneously interpreted one of DHSrsquos draft recommendationsmdashldquoa complete network rebuild is recommendedrdquomdashas both prescriptive guidance and direct support for its decision to



replace its entire IT infrastructure However DHSrsquos full draft recommendation advised EDA to reimage all IT components and implement required security measures effectively rebuilding its network Neither DHSrsquos nor NSArsquos recommendations provided a basis for EDArsquos decisions to replace its IT infrastructure and destroy its IT components

B EDArsquos Recovery Efforts Were Unnecessary

Despite recovery recommendations from DHS and NSA advising EDA to focus on quickly and fully recovering its IT systems EDA focused instead on building a new improved IT infrastructure and redesigning its business applications In September 2012 (8 months after isolation) EDA leadership presented to the Commerce IT Review Board (CITRB) a request to reprogram funds to carry out its recovery efforts the CITRB did not approve EDArsquos request25 EDA estimated it would need over $26 million disbursed in the next 3 years (an increase from $36 million to approximately $883 million or about 25 times more to the bureaursquos average annual IT budget) to fund its recovery efforts However EDArsquos intended recovery efforts

Had a fundamental flaw in acquiring funding EDA leadership did not understand that the funds it requested to reprogrammdashover $17 million originally designated for public works and disaster recoverymdashwould actually need to be ldquorepurposedrdquo26

Had an unrealistic time frame for acquiring requested funding The requestrsquos time frame would have required EDA to gain approval by October 2012 in order to maintain the intended schedule This was an extremely aggressive time frame given the process (in which CITRB approval was the first step) and time necessary to attain proper clearance to use the funds

Would leave EDA reliant on a less effective grants management process EDA users would only have limited access to critical business applications EDA was not scheduled to complete development of replacement applications until the end of FY 2014 (more than 2 years after isolation)

Conflicted with the Departmentrsquos ongoing development of a grants management shared service EDArsquos request for funding to redesign its business applications overlapped with the Departmentrsquos development of a grants management shared service

Further the following contradicted the direction of EDArsquos recovery efforts

25 The CITRB provides oversight review and advice to the Secretary and Deputy Secretary on both IT and non-IT investments that meet certain criteria This advice includes recommendations for approval or disapproval of funding for new systems and investments as well as major modifications to existing systems and investments 26 According to EDA it would have needed Departmental and OMB approval of its request to fund its recovery efforts before presenting the request to Congress EDA would also have needed to request that Congress change the law dictating the original purpose and use of the funds requested



External incident responders identified only common malware that could be easily mitigated As a result there was no need for EDA to destroy or replace existing IT components

NSA found no malware infection in the servers hosting EDArsquos primary business application Additionally there was no evidence to suggest that EDArsquos primary business application had been targeted by a cyber attack or maliciously alteredmdash thus EDA could have put the application back into full operation

Conclusion

Although EDA intended to use federal government shared services or outsourced commercial services during its recovery efforts EDA had not finalized a recovery solution Further the Department had existing shared IT services (eg image for rebuilding infected components enterprise e-mail and help desk services) that were readily available to EDA However only after OIG informed the Department and EDA that there was no widespread malware infection and therefore no significant incident did the Department and EDA enact a swift recovery of EDArsquos IT systems using the Departmentrsquos shared services

Once it started recovery efforts in February 2013 the Department needed only a little longer than 5 weeks to restore EDArsquos former operational capabilities27 By comparison EDArsquos incomplete efforts spanned almost a year Specifically the Department provided EDA with enterprise e-mail account management services help desk support services and a securely configured and uniform image for its laptops Additionally the Department restored EDA usersrsquo access to critical business applications

For the time being EDA will retain responsibility for maintaining its business applications however it may in the future use the Departmentrsquos grants management services With the Department developing and maintaining the IT systems there is a greater likelihood that the Department will appropriately implement the required security measures (eg secure configurations auditing and monitoring and patch management) that EDA struggled to implement Fortunately for EDA its involvement in the Departmentrsquos shared services initiatives not only restored its critical IT systems and business applications but should also reduce its IT budgetary requirements

27 EDArsquos previous access to NOAArsquos financial system has yet to be restored



Recommendations











Summary of Agency and Departmental Responses and OIG Comments The Deputy Assistant Secretary of Commerce for Economic Development and the Departmentrsquos Chief Information Officer (CIO) provided written responses to a draft of this report (see appendixes C and D) We provide summaries of these responses and our comments below

EDA Response

The Deputy Assistant Secretary of Commerce for Economic Development concurred with our recommendations and noted that EDA has begun implementation of the recommendations

EDA also noted that (1) EDArsquos focus has been to fully and efficiently recover its IT systems (2) it has been abundantly cautious in its efforts to protect its staff other Department systems grantees clients and other federal partners (3) it continued to conduct and complete its important work on time despite the interruption and (4) it worked closely with the Census Bureau for an interim recovery solution and more recently leveraged the Departmentrsquos shared services EDArsquos response identified corrective actions it has taken and plans to take to implement our recommendations

EDA stated in its response that it ldquoappreciates the Office of Inspector Generalrsquos (OIG) comprehensive review and continued involvement from the very early days of the incident when EDA proactively requested OIGrsquos review of the matterrdquo While we initiated this audit at the request of the former Acting Deputy Secretary of Commerce we appreciate EDArsquos cooperation throughout our audit

In its response EDA noted that its long-term recovery plan already included greater use of shared services by leveraging Department-wide IT assets However prior to our briefing on December 18 2012 EDA had not finalized a recovery solution such as using the Departmentrsquos available shared services

Department CIO Response

The Departmentrsquos CIO concurred with our recommendations related to DOC CIRT noting that the Department has initiated a comprehensive incident response improvement project The CIO further stated that the following project milestones have already been completed (1) conducting a third-party assessment of the DOC CIRT policies procedures and capabilities (2) hiring experienced and certified incident handlers and (3) implementing an improved incident tracking system

In addition the Departmentrsquos CIO stated that within the past 6 months the OCIO and the Office of the Secretary (OS) IT Operations worked closely with EDA to restore its functionality by bringing EDArsquos grants management system online and bringing EDArsquos office automation and IT service desk under the OS Information Technology Services



Appendix A Objectives Scope and Methodology Our objective was to evaluate EDArsquos information security program and its recovery activities in relation to EDArsquos cyber incident We (1) assessed the effectiveness of EDArsquos IT security program (2) determined the significant factors that contributed to the incident and (3) evaluated both completed and planned activities to recover its information systems to support critical operational requirements To do so we

Reviewed system-related artifacts including policy and procedures planning documents and other material supporting the security authorization process

Reviewed artifacts related to EDArsquos incident including incident reports forensic analysis logs written communications and other incident documentation

Interviewed operating unit and Department OCIO personnel including system owners IT security officers IT administrators external incident responders and organizational directors and administrators regarding the security and operation of EDArsquos IT systems and the incident

We also reviewed EDArsquos compliance with the following applicable provisions of law regulations and mandatory guidance

The Federal Information Security Management Act of 2002

Information Technology Security Program Policy US Department of Commerce introduced by the Chief Information Officer on March 9 2009 and applicable Commerce Information Technology Requirements

NIST Federal Information Processing Standards Publications

o 199 Standards for Security Categorization of Federal Information and Information Systems

o 200 Minimum Security Requirements for Federal Information and Information Systems

NIST Special Publications

o 800-34 Contingency Planning Guide for Federal Information Systems

o 800-37 Guide for Applying the Risk Management Framework to Federal Information Systems

o 800-53 Recommended Security Controls for Federal Information Systems and Organizations



o 800-53A Guide for Assessing the Security Controls in Federal Information Systems

o 800-61 Computer Incident Handling Guide

o 800-70 Security Configuration Checklists Program for IT Products

We conducted our fieldwork from June 2012 to February 2013 We performed this audit under the authority of the Inspector General Act of 1978 as amended and Department Organization Order 10-13 and in accordance with generally accepted government auditing standards Those standards require that we plan and perform the audit to obtain sufficient appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives We believe that the evidence obtained provides a reasonable basis for our findings and conclusions



Appendix B Detailed Timeline of EDArsquos Cyber Incident Response and Recovery Cyber Incident

1262011 US-CERT notifies DOC CIRT of a cyber incident (components communicating with fake antivirus sites)

1272011 DOC CIRT sends EDA a first incident notification concerning US-CERTrsquos alert The notification contains an inaccurate list of 146 potentially infected components

1282011 DOC CIRT sends EDA a second incident notification containing completed analysis that identified only two infected components

1292011 EDArsquos ITSO informs EDArsquos CIO that EDA experienced a potential widespread malware infection

12132011 EDArsquos ITSO requests forensic assistance from DOC CIRT and on 12142011 EDA provided DOC CIRT with the hard drives from two components that were exhibiting malicious behavior

12152011 EDA asks DOC CIRT to block the malicious sites and addresses associated with the US-CERT alert

12162011 EDArsquos CIO informs EDArsquos leadership that the malware infection is potentially widespread

1182012 DOC CIRT notifies EDA that it identified a common malware infection on the two components EDA provided to DOC CIRT on 12142011 DOC CIRT advises EDA to reimage the infected drives and put the remediated components back into operation EDA informs DOC CIRT that it cannot do this because there are too many infected components

1202012 EDArsquos CIO notifies EDArsquos user base of the malware infection and advises that all users follow good security practices DOC CIRT requests US-CERTrsquos assistance and US-CERT arrives onsite

1242012 EDArsquos CIO believes that the e-mail server experienced a complete operational failure and upon restoration an antivirus scan showed multiple malware infections EDArsquos CIO informed EDArsquos leadership (and the Departmentrsquos Deputy CIO) of the need to isolate EDA from the HCHB network EDA takes the following actions disables its Microsoft Exchange e-mail server connection disables Internet access disables its connection with regional offices and maintains local file-share service availability



1272012 DOE and NIST incident responders assist onsite with the incident response

1302012 EDA hires a cyber security contractor to assist at the EDA CIOrsquos discretion US-CERT issues a preliminary analysis report which indicates the presence of common malware but no nation-state activity or extremely persistent malware

222012 The Department requests NSArsquos assistance to investigate the malware infection

232012 DOE releases its report detailing assessment results from an assessment of one component that indicated a common malware infection but did not identify any nation-state activity or extremely persistent malware

272012 DHS issues a report that summarizes its findings and includes recommendations for remediating the infection and establishing good IT security practices Additionally the report used inaccurate information provided by DOC CIRT to portray EDArsquos incident as widespread

2142012 NSA assists onsite with incident response activities

2172012 NSA analysis of the Linux systems finds no evidence of an intrusion or malware infection

5152012 NSA releases a report stating that EDA had a widespread common malware infection NSA portrayed this information as fact even though it did not independently validate the information it received from DHS However NSA did analyze EDArsquos Linux servers and found that the servers were not infected and there was no indication of nation-state activity or extremely persistent malware

Recovery

1242012 EDA operates its existing IT infrastructure in isolation during interim recovery activities in order to meet its deadlines for grants management

262012 EDA begins coordination with the Census Bureau on its interim recovery activities

2142012 EDA establishes a Web presence and makes e-mail service available to a limited number of Blackberry users

3252012 The Census Bureau restores Blackberry service for all EDA staff and EDA completes the distribution of laptops to all users This provides office automation capabilities e-mail services and Internet access for all users

452012 EDA provides users access to a stand-alone implementation of its business applications which contains historical data necessary to complete its mission activities



5152012 EDA stops its forensic analysis activities and switches to full-time data cleaning involving the use of several antivirus products to scan data files for indications of an infection The cybersecurity contractor did not identify any additional components with a malware infection (the contractor did identify the existence of common malware contained in archived e-mail attachments and temporary Internet browser files)

952012 EDA presents a request to the Commerce IT Review Board (CITRB) for funding to carry out its recovery efforts The CITRB does not approve EDArsquos request necessitating changes to the intended recovery efforts

262013 OCIO begins restoration of EDArsquos IT systems

3152013 OCIO restores EDArsquos IT operations including restoring access for all users to its critical grants management applications



Appendix C Agency Response




~ltMORANDUM HlR ASSISliiNT I~PECTOR GENERAL roR SYSTEM ACQIJISI1101 MmiddotD 11 SICIIRil Y Junlt 12 2013 P~~ge I of 2

Attachment

In response to the 20 ll cyber incident EDA took proactive measures to increase the security and efficiency of its Information and Technology (IT) system ensure quality service to all its stakeholders and clients and enable accow1tability by requesting the Oflice of lnsp--ctor General (OIG) evaluate the agencys response and recovery activities

RccQmmendation I Identify EDAs areas of IT responsibility and en ure the implementation of required security measures

EDA Response EDA agrees with this recommendation

Corrective Action To Date

l EDA transferred a majority of its IT responsibilities to the Department of Commerce (DOC) Oftice of Chief Infonnation Officer (OCIO) In addition EDA middotsLoan Billing and Managing System (LBMS) has been transferred to the National Oceanic and Atmospheric Administration (NOAA) The c actions have resulted in a significantly more eflicicnt and higher level of overall IT operations and security

EDA has identified two remaining areas of IT responsibi lity Operations Planning and Control System (OPCS) and the Revolving Loan Fund Management System (RLFYIS) EDA has maintained a highmiddot leve l of security with each of these systems and will continue to do so as the agency works with OAA to transfer system funct ionality to NOAAs secure environment

2 EDA has implemented a program to increase the security trai ning and capabilities of all staff especially the agency s IT staff By October 2012 EDA had successfully ensured that eight of its I I OfT employees had achieved DOC IT ecurity Role Cenitications With these ceni fication EDA has achieved I 00 percent compliance ith the DOC IT Security Role Ceni fications In addition EDA has currently completed 94 percent of the required FY 2013 IT Security Role-Based Training for all of the agencys staff members and expects to reach 100 percent prior to the June 30 deadline

Continued Action

I EDA will contiJ1UC its current work with NOAA 10 transfer its remaining two areas of IT responsibility OPCS and RLFMS to NOAAs secure environment

2 EDA and the DOC will reinstate the Oversight leering Committee to review and provide guidance on IT security



Olf MORANDIJM fOR D~PlrrY 11-SP~C I OR GE ERAl ~OR AIJDI rAND EVALUATION J~nlt 11 2013 Page 2 ol 2

Recommendation 2 Determine whether EDA can reduce its IT budget and staff expenditures through the increased efficiencies of EDA s involvement in the Departments shared services

El)A Response EDA agrees with this recommendation


EDA has carefully reviewed its IT expenditures since the 20 II cyber incident and through it usc of shared services has increased the efficiency and security of its IT system EDA s previously established long-tenn recovery plan already included greater use of shared services by leveraging existing or planned dcpanmcnt-wide (including other bureau) IT assets As cost efficiencies are generated from its implementation of shared services EDA s first priority will be to continue its work with the Depanment and bureaus to ensure that all required and recommended security processes procedures software and services are fully implemented

Continued Action

EDA and the Depanment will reinstate the Oversight Steering Committee to review and provide guidance on IT cost savings and increased efficiencies

Recommendation 3 Ensure that EDA docs not d estroy additiona l IT inventory that was taken out of scn icc as a result of this cybcr incident

E DA l~csponse EDA agrees with this recommenda tion


In an effon to secure its IT system due to the cyber incident EDA replaced its IT components with equipment on loan from the Bureau of the Census Upon migration of our IT operations to the DOC HCHB network EDA installed new equipment that had been purchased Brim to the cyber incident Prior to the cyber incident EDA had planned to clean and surplus desktop computers and servers scheduled for replacement As a result of this repon and because very little of this equipment has been destroyed EDA is able to continue this planned action

Continued Action

EDA still posse ses 96 percent of its replaced inventory and intends to either put that inventory back into service or surplus the items



Appendix D Departmental Response


011200000142


UNITED STATES DEPARTMENT OF COMMERCE Office of Inspector General Washington DC 20230

June 26 20 13

MEMORANDUM FOR Matthew Erskine Deputy Assistant Secretary of Commerce

for Economic Development Economic Development Administration

Simon Szykman

Chief Information~ r~

FROM Allen Crawley G A Assistant Inspector General for Systems Acquisition

and IT Security

SUBJECT Malware Infections on EDAs Systems Were Overstated and the Disruption of IT Operations Was Unwarranted

Final Report No OIG-13-027-A

Attached is the final report of our audit of EDAs information security program and cyber incident response In accordance with the Federal Information Security Management Act we evaluated EDAs incident response and recovery activities in relation to EDAs fiscal year 20 12 cyber incident We (I) assessed the effectiveness of EDAs IT security program (2) determined the significant factors that contributed to its incident and (3) evaluated both completed and planned activities to recover its information systems to support critical operational requirements

We found (I) EDA based its critical incident response decisions on inaccurate information (2) deficiencies in the Departments incident response program impeded EDAs incid~nt response and (3) misdirected planning efforts hindered EDAs IT system recovery

In response to the draft audit report EDA and the CIO concurred w ith all of our recommendations We summarized the responses in the report and included the full response in the appendixes We will post this report on the OIG website pursuant to section 8L of the Inspector General Act of 1978 as amended

Under Department Administrative Order 213-5 you have 60 calendar days from the date of this memorandum to submit an audit action plan to us The plan should outline actions you propose to take to address each recommendation

We appreciate the cooperation and courtesies extended to us by your staff during our audit Please direct any inquiries regarding this report to me at (202) 482-1855 and refer to the report title in all correspondence

Attachment



Background









OIG-13-027-A

WHAT WE FOUND






WHAT WE RECOMMEND


















Conclusion 10





Conclusion 14




Conclusion 16

Recommendations 17









































































Security Measure



OIG and NSA

Reviewsa





Patch Management































Conclusion















$823000



































Conclusion






























Conclusion







Recommendations












EDA Response





















































Recovery



















Attachment








Continued Action





Olf MORANDIJM fOR D~PlrrY 11-SP~C I OR GE ERAl ~OR AIJDI rAND EVALUATION J~nlt 11 2013 ol 2





Continued Action






Continued Action






011200000142


Attachment



Background









OIG-13-027-A

WHAT WE FOUND






WHAT WE RECOMMEND


















Conclusion 10





Conclusion 14




Conclusion 16

Recommendations 17









































































Security Measure



OIG and NSA

Reviewsa





Patch Management































Conclusion















$823000



































Conclusion






























Conclusion







Recommendations












EDA Response





















































Recovery



















Attachment








Continued Action










Continued Action






Continued Action






011200000142



Background









OIG-13-027-A

WHAT WE FOUND






WHAT WE RECOMMEND


















Conclusion 10





Conclusion 14




Conclusion 16

Recommendations 17









































































Security Measure



OIG and NSA

Reviewsa





Patch Management































Conclusion















$823000



































Conclusion






























Conclusion







Recommendations












EDA Response





















































Recovery



















Attachment








Continued Action










Continued Action






Continued Action






011200000142











Conclusion 10





Conclusion 14




Conclusion 16

Recommendations 17









































































Security Measure



OIG and NSA

Reviewsa





Patch Management































Conclusion















$823000



































Conclusion






























Conclusion







Recommendations












EDA Response





















































Recovery



















Attachment








Continued Action










Continued Action






Continued Action






011200000142




































































Security Measure



OIG and NSA

Reviewsa





Patch Management































Conclusion















$823000



































Conclusion






























Conclusion







Recommendations












EDA Response





















































Recovery



















Attachment








Continued Action










Continued Action






Continued Action






011200000142
















Conclusion















$823000



































Conclusion






























Conclusion







Recommendations












EDA Response





















































Recovery



















Attachment








Continued Action










Continued Action






Continued Action






011200000142













$823000



































Conclusion






























Conclusion







Recommendations












EDA Response





















































Recovery



















Attachment








Continued Action










Continued Action






Continued Action






011200000142


























Conclusion






























Conclusion







Recommendations












EDA Response





















































Recovery



















Attachment








Continued Action










Continued Action






Continued Action






011200000142
















Conclusion







Recommendations












EDA Response





















































Recovery



















Attachment








Continued Action










Continued Action






Continued Action






011200000142



Recommendations












EDA Response





















































Recovery



















Attachment








Continued Action










Continued Action






Continued Action






011200000142




EDA Response





















































Recovery



















Attachment








Continued Action










Continued Action






Continued Action






011200000142














































Recovery



















Attachment








Continued Action










Continued Action






Continued Action






011200000142














Attachment








Continued Action










Continued Action






Continued Action






011200000142







Continued Action






Continued Action






011200000142




011200000142


malware infections on eda systems overstated and disruption of it

Documents